Gilbert Company Lease Term Determination

How many years is the lease term for Gilbert Company?

Is it:

A. 3 years

B. 5 years

C. 7 years

Answer:

The lease term for Gilbert Company is 5 years.

At the beginning of the lease, Gilbert Company determined that the lease term would be 5 years. This initial noncancelable lease period is for 5 years, with a 5-year renewal option. The leasehold improvements made by the company that are expected to retain significant value at the end of 5 years do not extend the initial lease term.

After the expiration of the lease term, Gilbert Company has the flexibility to either renew the lease or relocate to a different space based on their business needs and circumstances at that time.